_"Whoever wrote this is just poor-mouthing." He flipped on through thesheets, then looked up. "Saying he needs more money for basic research.I hear this kind of stuff all the time. Hell, Japan already spendsnearly twice what we do per capita on nonmilitary R&D. What does hewant?"
"Keep reading, Jack, and you'll see that the main R&D he's pushing isin computers and semiconductors. It ties in exactly with Ikeda'stargets. This is backup consensus for the big drive."
"You still haven't told me anything I didn't already suspect." Hetossed the pages onto a side table. "So how about answering a few less-obvious questions?" "Shoot."
"First off, what's this Operation Marketshare - 90 all about?" He tookoff his glasses and pocketed them.
"Jack, remember the famous Hitachi directive that got loose a whileback, the one on how to market their 256K memory chips, ordering theirsalesmen just to keep underpricing American manufacturers till they hadthe sale, loss no object. According to Henderson, by the time theInternational Trade Commission got around to convicting them ofdumping, they'd demolished America's domestic industry and nailed downninety percent of the market."
"Ninety, you say. Well, that's getting to be a familiar number." Heslumped back against the sofa. "Out of curiosity, what's included inthis MITI Marketshare - 90 operation?"
"Computers, of course. But also pretty much everything in high techwhere the U.S. still has a leading position--from biotech to aerospace.These guys don't think small."
I gave Ben a pat, then pulled Mori's printout around, going on toexplain that we'd come across it in the drawer of her desk. It was, Iadded, obviously some kind of special computer sorting of the firms DNIwas targeting. The categories in the sort were a breakdown of high-techareas, with individual firms listed underneath, together with a summaryof their research expenditures.
"Take a look. First, notice that this printout has been sorted andconverted into this list here." I placed it alongside the page I'dfound in the Xerox machine. "Voila, they're identical."
"So?"
"Okay, now compare that list with the R&D areas targeted in Ikeda'smemo." I laid Tarn's translation down next to Mori's pages. "See?Everything on Ikeda's MITI wish list for research in semiconductors isnow being done by the American outfits named here in Mori's sorting,which is the latest revision in DNI's acquisition program."
"What are you getting at?" He looked it over.
"It's a pattern." Tam spoke up. "These new buy-ups cover Japan's lastremaining shortfalls in R&D. I spotted it right away. But what I didn'trealize till we got these memos was that the areas covered by Mori'scompanies exactly dovetail with MITI's goals. I probably wouldn't havenoticed it without her sorting. Mixed in with all the other companiesNoda's buying, he's targeted those that fill the gaps in MlTI'ssemiconductor push."
Jack looked at us quizzically. "Are you telling me MITI's behind Noda'sprogram?"
That's where Tam and I parted company. She argued it was obviously aMITI play: why start from scratch when you can just buy what you need?Sound business investment. For some reason, though, I wasn't so sure.Somehow that explanation seemed too simplistic. Unfortunately, however,there's a law in science or somewhere that says you should always pickthe least-complicated theory that fits all your data. Hers appeared onthe face of it to address the facts perfectly. Except for one unknown:if Mori did "accidentally" feed me the sorting that blew the whistle onNoda's design, why?
"I think this has to be what the buying program on this list is allabout," Tam answered. "He's taking over firms whose R&D coincides withMITI's targets. Matsuo Noda has been put to work simply acquiring whatthey need, but to make sure nobody suspects the real agenda, he'sworked up this elaborate 'management assistance' story, buying allkinds of companies." Her voice was bitter. "The next step will be toset up joint ventures between these firms he's bought and theircounterparts in Japan. Then all American R&D would be shared."
"Which means"--Jack's face began to redden--"that since we always seem tolose out when it comes to commercializing what we invent, the U.S. endsup becoming one big think tank for Japan in the twenty-first century.We do the research, and they manufacture and market. They pick ourbrains and then cash in on it." He turned back to Tam. "Do you reallythink it was Noda who planned all this?"
"I wish I knew what to think." Her voice grew hesitant as she continuedto stare down at the memo. "It's hard to believe Ken would do somethingso unethical--especially a grab like this--when I'm sure he's convincedJapan ought to be advancing its own R&D."
"Ken? Who's--"
"Did you see who authored that second memo?" She pointed to the name.
"Kenji Asano is apparently a close friend of Dr. Richardson's," I brokein, my tone unnecessarily sharp. "Unfortunately, he seems to be an evencloser friend of his cronies at MITI."
Tam didn't respond, just sat there looking betrayed.
"Matt, let's be constructive here." Jack walked over and shook thecoffee pot, then sloshed the last dregs into his cup. "We damn wellought to take some kind of action."
"That's why we wanted to talk to you." Tam came back to life. "Do youthink you could leak something about this? Maybe to the Times?"
"And say what?" He laughed, a little sadly. "That I've happened acrossa set of secret MITI memos that bear a coincidental similarity to somestolen DNI printout? Don't think that's exactly 'Fit to Print.'" Hefrowned. "But I'm glad our Mr. Noda has finally let slip his trueintentions. I never believed all that pious malarkey about propping upAmerican industry." He snorted. "The man gets a few suckers like you tohelp him destabilize our bond markets, in the process of which he turnsthe high-tech sector of American industry into a bargain basement forMITI."
Tam sipped her coffee, maybe trying to act as if Jack's comment hadn'tstung her the way I suspected it did. I decided to try and handle herdefense.
"Jack, hold on a second. You've got to admit that a lot of theseoutfits Dai Nippon is buying are currently on pretty thin ice. Ifsomebody doesn't come in here and help run them right, they're probablyheaded offshore anyway."
"We're not talking about first aid now, Walton. We're talking aboutMatsuo Noda taking over the most strategic segment of our economy afterpulling the biggest scam in the history of world finance."
"That looks to be the story." I watched his cheeks redden withfrustration. "So what do you propose we do? There's no law againstforeign investment. Securities exist to be bought."
"Well, dammit, Matt, we've both seen enough by now to realize this Nodagenius is up to no good. We've got to stop him."
"Couldn't agree more. So why don't you just arrange to have the SECshut down trading in every stock DNI has in its gunsights."
"You know that's out of the question."
"Exactly. So what legal remedies are there? How do you squelch atakeover program that's not even against the law?"
"That's your specialty, counselor, or so I hear."
"Jack, be realistic. We can expose this thing, maybe even try and leanon Tokyo to back off, but aside from shutting down trading there's nolegal way to actually stop Matsuo Noda from buying whatever he likes.You can't shut Japanese investors out of Wall Street. There'd be a riotdowntown. We're talking about the open market here, not some insidedeal."
"Forget legalities." He scowled. "Tell me how your damned corporateraiders go about shenanigans that don't quite match the letter of thelaw."
"Jack, I've officially quit the business. Retired. Guess you hadn'theard."
"That's what you think. You just got un-retired. As of this moment. Nowgive me one of those high-priced consultations you're so famous for."
"For you, Jack." I looked him over. "One last play. Trouble is, there'snot much that's do-able, at least on short notice."
"You say 'not much.' Which means there's something."
"Well, one possibility might be to try and slow him down
some, make him think twice, say, by punching up the prices of thestocks he's aiming at. Make them less of a bargain."
"Th
at's a start."
"Not much of one."
"Well, how could it be done?"
"Since you're such a Boy Scout, Jack, you probably won't like what Ihave in mind. This one's not exactly in the rule book."
"Try me."
"Okay, it's a long shot, and we'll definitely need some help. If we'regoing to tinker with the market, then we have to have somebody WallStreet trusts. And also somebody who's got a lot of money to play with,short term."
"Sounds like our mutual friend from Georgia."
"Well, Henderson can play the Street like a symphony. What I'm thinkingof involves tricking the smartest guys around, the 'risk arbs.' We'dneed to suck them in. If anybody can do it, he's the man."
"Then I say let's give him a buzz."
"Fine. Why don't I get him on the squawk box so we can all listen in."There beside the couch was an old conference phone some client oncegave me as a Hanukkah gift. At long last it might be good forsomething.
The risk arbs, by the way, are the risk arbitrageurs, those speculatorswho live with one ear to the ground. The minute they hear word, insideor otherwise, that a company is "in play," meaning it's a candidate fora possible takeover or merger, they immediately grab up and stockpilehuge blocks of its publicly traded shares. Then they sit back and prayfor a bidding war. Since company A has offered so much a share forcompany Z, maybe company B will step in and offer more. Or maybecompany Z itself will outbid them both and offer even more in a stockbuyback. They're the hyenas of the hunt, getting plenty of leftovers nomatter who ends up buying Z. Besides, they don't really care anyway.They're not investing in American industry, they're laying side bets.
Tam and Jack settled back while I punched in Bill's number.
The doctor was in, and after a few profane formalities-- tempered whenwe informed him of a female presence--he listened with uncharacteristicattentiveness. I gave him an
update, concluding with the view that we ought to try heading offMITI's presumed play.
Henderson, despite his admiration for Noda's style, didn't take kindlyto the possible buy-up of America's remaining R&D in semiconductors, aspecter that coincided all too closely to his own fable about how MITIhad already eaten one segment, memory chips. I decided to start byseeing if he and I were on the same wavelength concerningcountermeasures. Without tipping him to my own idea, I asked what hethought could be done.
"Tell you, it won't be easy. One thing, though, we could maybe try andscare 'em off with a little brushfire."
"Try that in English, Bill," Jack interrupted.
"Don't know, maybe a few hot rumors could hit the Street . . . mergers,takeovers, your usual quick-buck action. Say a few of the CEOs of theseoutfits on Noda's Christmas list had a little powwow, a 'secret'meeting everybody manages to hear about, and supposedly talked aboutgettin' themselves bought out. Naturally they'd deny everything on theEvening News, which in itself will tell the Street we're talkin'wedding bells."
"Is that really going to do us any good?" Tam was talking to the box.
"Afternoon, ma'am. Liked that last book of yours a whole lot. Hopeyou're keeping them boys sober." I could almost see Henderson turn upthe charm, sculpting a voluptuous, horny divorcee in his ardentimagination. Tam, to my surprise, was not totally immune to his Georgiasweet talk. She sort of smiled to herself as he continued, "But toanswer your question, a takeover rumor can do marvels for your stockprice. What happens is the 'arbs' come in, snapping up blocks of stockand holding them, just in case. It can take a lot of securities out ofcirculation, at least short term. So if we could get the arbs tochasing those companies on Noda's list, they'd give the Japs a littlecompetition. At the very least it'd kite the market, hurt theirpocketbook."
"Bill, that's why we wanted to call you. How about putting yourfinances where your flag-waving is? Be an arb yourself for a few weeks.Lead the herd. Start picking up some blocks of stock and shooting offyour mouth a lot about your 'inside' information. I'll even kick in mymodest retirement fund to help the action."
"What if somebody pulls the rug out from under us? Shoots the wholething down? We'd be left holding all that stock we'd bid up. We couldlose our shirt."
"Then protect the downside by buying puts. I have full faith you'llthink of something. Come on, Henderson, be a market maker. You've gotthe credibility. All you have to do is set a spark to this, then we'llquietly head for the sidelines to make way for all those investment-house yuppies who love to shoot craps with their clients' money."
"Have to be a quick in and out for damned sure. This hot-air balloonwon't stay up for long." He paused, clearly not wild about the idea."Tell you what, though, maybe if we had a real good story."
"Ideas?"
"Well, how about this? Maybe we've just heard on the grapevine thatthose outfits on Noda's play list have started a little 'white knight'talking. And since this is just speculation, we might as well thinkbig. Know who I mean?"
"The pride of Armonk."
"Give that man a gold star. We both know IBM headquarters ain't talkedto nobody but God since Watson outgrew his short pants, so it'd beweeks before they'd stomp on some horse-pucky rumor about how they werelooking into saving whatever's left of the chip business here. Justcovering their ass, we'll say. Friendly mergers. No poison pill stuff."
"That's exactly the kind of specious 'supporting detail' that alwaystriggers the Street's greed." I concurred. "Offhand I'd say that soundsjust about perfect for tomorrow's hot tip on the Exchange floor."
In truth it did seem like a workable first draft of an idea. No lawagainst deep background sources that turn out to be 24-carat bullshitdown the road. The antitrust implications would be front page for acouple of days, but since the administration adhered to the 'see noevil' school of regulation, that angle wouldn't impress the smartmoney. America starts thinking big, chucks the myth of garageentrepreneurs, and staves off Japan using a dose of MITI's ownmedicine. IBM rides in to rescue what's left of Silicon Valley. Itmight just make Matsuo Noda back away. He'd learn America could playhardball too.
We told Bill to take the rest of the day off. Jack was, I can report,noticeably encouraged. Tam also. For my own part I just crashed, with afew wistful reflections on my rocky
non-seduction. But if we pulled off our little scam, she might be moreinclined to take me seriously.
As Shakespeare said, Lord, what fools these mortals be. I realized thetrue extent of Matsuo Noda's reach on Monday, just after noon. I wasstill home when Tam called from the office uptown to inform me of thelatest developments. I was so busy on the phone just then, plantingmerger rumors with a few friendly columnists, that I was almost annoyedto take time out for her call. However, she quickly captured myattention.
First, the revisions on DNI's acquisition program were in full swing.Noda had started purchasing those healthy semiconductor outfits on thenew list.
Then she went on to say that an additional set of buy orders had justgone out over the wire. Noda had been on his satellite hookup to Tokyoall morning, and he'd now finalized official authorization for a minorexpansion, so to speak, in DNI's program. Apparently Tokyo had agreedwith him that his portfolio should include a certain high-grade issueto achieve better overall "balance."
She didn't say much more, for obvious reasons, but we both had a stronghunch what must have happened. If anything was bugged, for chrissake,it wasn't my apartment. That's B-movie stuff. It had to be my phone.
Matsuo Noda had just kicked off a new buy program to the tune of threeand a half billion. For what? More high-tech stragglers? Not precisely.One company, and in an amount intended to stay safely just below theSecurities and Exchange Commission's Form 13-D mandatory reporting.Twenty-five million shares of IBM, roughly a full four percent of BigBlue.
It was a massive variation of the "Pac-Man" takeover defense: you eatanybody you think wants to eat you. Noda's message to us was loud andclear: he could buy the USA anytime he wanted. Dai Nippon wasunstoppable.
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